Sensex falls for 2nd day on profit booking; midcaps shine

4:00 PM: Sensex falls for 2nd day on profit booking; midcaps shine

Equity benchmarks saw consolidation (with marginal downside) for the second consecutive session on Friday as investors remained cautious after indices hit record highs in middle of the week and on weakness in global equities ahead of US jobs data.

The 30-share BSE Sensex fell 59.23 points to close at 27026.70 while the 50-share NSE Nifty struggled for the second day to hold 8100 level but it could not, down 9.10 points to 8086.85. However, the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.56 percent and 1.25 percent, respectively.

Though there was a consolidation (which was expected after huge run-up in previous sessions), experts remained firm on their analysis, saying the upmove may continue at least till the next Union Budget.

Sachin Shah, Fund Manager at Emkay Investment Managers believes the undertone for the market continues to remain buoyant on the back of good foreign institutional investor (FII) flows and net buying from domestic mutual funds.

There have been some positive signs on the macro front too like oil prices remaining subdued, some good quarterly results and government making right noises, which would keep up the buoyancy, says Shah.

Meanwhile, Vibhav Kapoor, group Chief Investment Officer, IL&FS feels Indian equities are not overvalued at this point and the Nifty could touch 9000 by March .

Global markets too were down ahead of US employment data due later today. France’s CAC, Germany’s DAX and Britain’s FTSE fell 0.2-0.7 percent, at 16:15 hours IST.

For the week, the Sensex gained 1.5 percent and Nifty rose 1.7 percent while CNX Midcap shot up 4.1 percent and BSE Smallcap rallied 3.5 percent.

Private banks and auto stocks saw selling pressure while technology and steel stocks gained strength.

Liquor maker United Spirits tanked 4.6 percent (the biggest loser in the Nifty 50) as brokerages turned cautious on the stock post FY14 earnings. Credit Suisse reduced target price on the stock to Rs 2200 from Rs 2700 and cut FY15-16 earnings per share estimates by 30-50 percent while CLSA revised its rating to underperform from sell. Housing finance company HDFC, two-wheeler maker Hero Motocorp and state-run coal miner Coal India were prominent losers in the Sensex, down around 2 percent. Among others, ICICI Bank, Tata Motors, Bharti Airtel, BHEL and Tata Power fell over a percent. Jaiprakash Associates crashed over 10 percent as brokerages turned bearish on the stock .

Goldman Sachs is concerned about its high leverage, with 4.5X consolidated net debt to equity and 0.7X interest coverage (EBIT/interest expense) as of March-end. Besides, the promoter stake-sale some recent events have raised questions about its profitability, it added. However, state-run iron ore miner NMDC and realty major DLF topped the buying list, up 5.27 percent and 4.75 percent, respectively. Shares of ONGC, State Bank of India, Bajaj Auto, Cipla, Sesa Sterlite and Gail India gained 1-1.5 percent. In the technology space, three companies bagged big orders. Wipro was up nearly a percent on getting five-year strategic infrastructure management contract from Philip Morris International (PMI), the tobacco company.

India’s second largest software services exporter Infosys rose 0.6 percent on bagging five-year deal worth USD 500 million with BP. JP Morgan maintains overweight rating on the stock with a December 2015 price target of Rs 3900, stating that the recent management change has potentially delayed revenue growth recovery but has also brought much-needed visibility. Tech Mahindra hit a record high of Rs 2,521.80 during the day, though it closed flat.

The company and Bombardier Aerospace have signed a mutual agreement that will lead Tech Mahindra to work with Bombardier globally. Engineering and construction major L&T was up 1.3 percent on getting big order worth more than Rs 5,100 crore from Madhya Pradesh state utility for setting up 1320 MW power plant. Advancers beat decliners on the Bombay Stock Exchange by a ratio of 1698 to 1269.